This Bill establishes a new financial governance structure for the HSE. It sets a new budget limit and it establishes the first-charge principle so that if the HSE over-runs its budget, that overrun is taken from the following year's budget. It imposes legal obligations on the director general of the HSE to live within his or her financial limits. All these provisions are welcome.
The principal provision is the disestablishment from 1 January 2015 of the Vote of the HSE and the funding of the HSE through the Vote of the Minister for Health. This is a very significant provision and is of some concern. The reaction to this proposed legislation has been very muted in so far as there has been very little reaction from stakeholders and the media has not focused on it to any great extent. This is to be expected because health administration tends to be a very dry subject. People waiting on trolleys and on waiting lists always tend to get the attention of the media rather than the administration of the health service. All of us in this House know that getting health administration right is critical to getting the front-line services right. If there is not a robust administration many things can go wrong. This has been evident over the years with the various configurations of the health service.
This legislation is being introduced under the guise of greater accountability for that €13 billion spend and the decision about who will be responsible for that spend. I have serious concerns about the proposal to concentrate responsibility for expenditure of that scale in the hands of one person, the Minister for Health of the day, whoever he or she may be. This raises significant questions about accountability and the lack of an arm's length approach by the Minister. It is somewhat different in other Departments where much of the expenditure is already spoken for. In the Department of Social Protection the expenditure is decided because the social welfare rates are known and there is no discretionary element. However, the Department of Health has a significant element of discretion as to where the €13 billion should be spent.
When one considers this legislation in combination with the HSE governance Bill, it throws the notion of proper corporate governance out the window. There is no break on the decisions of a Minister if all that power and responsibility is vested in one person's hands. The financial controls in the HSE are far from ideal and I would be the first to accept that there is a need to greatly strengthen those controls. I also acknowledge the fact that some progress has been made in that area in recent times. If full responsibility for that €13 billion expenditure is being taken over by the Minister for Health and the Department of Health, where is the expertise within the Department to manage a budget of that scale? As I am aware there is no health economist in the Department.
It is a very basic consideration where a body is taking over responsibility for a huge budget that we be assured the expertise exists within that body to manage a budget and ensure proper controls. I have concerns in that regard.
Efforts to centralise power and control are happening in the context of what we are told is a move to universal health insurance, UHI. We have had the removal of the board of the Health Service Executive, removal of any independent oversight, and removal of any checks and balances in regard to the budget. All these major decisions are being taken in the context of a promised move to UHI, but we still have not seen the White Paper that was promised in the programme for Government for delivery in the early stages of the Government's term. We are going into the fourth year of this Dáil and we still have not seen it. By all accounts, including the comments made by the Tánaiste this morning, it will be some time before that White Paper is produced. Moreover, there will be a long process to go through after that, assuming the promised White Paper is genuinely a discussion document.
While there are many excellent aspects of our health service, there are also several aspects that are seriously dysfunctional. These dysfunctional aspects must be addressed before we move to a system of universal health insurance. Overall, the health service does not serve patients optimally. There is far too much emphasis on hospital care and very little on preventative medicine, early diagnosis and so on. The greatest concerns in respect of the health service are its two-tier nature and that the cost base is far too high. The programme for Government provides for a significant reduction in the cost base. If that is not achieved before moving to a new system, we are merely imposing the rule of insurance companies on an already problematic and dysfunctional system.
These underlying problems must be dealt with urgently, but the promises we were given in this regard have not been delivered to date. The greatest cost driver across the health service, in primary care and in hospitals, is drugs costs. In spite of many promises to that effect, we have not seen the types of reductions in drugs costs that were envisaged. We still have a situation where Irish consumers - and taxpayers, through the primary care reimbursement service - are paying multiples of what drugs cost in other jurisdictions. Unless that issue is tackled, we will continue to see costs going through the roof.
The same applies in regard to consultants' pay. Again, the programme for Government provided for control of the cost of consultants' remuneration. What the Minister chose to do, however, was cut the pay of new consultants drastically. This is having a knock-on effect in terms of discouraging people from applying for jobs here. Why would young consultants, who have put so much time and effort into their training, be willing to work for 30% less than the people working alongside them? Rather than tackling the problem of high pay among consultants - some 500 of whom are earning in excess of the public sector pay cap of €200,000 - the Minister chose, unfortunately, to penalise new entrants. That is having a very negative impact all around.
Another factor driving costs for consumers is the rising price of private health insurance. Rather than tackling the problem of rising insurance costs, however, measures introduced in the past two budgets have actually made insurance less affordable. In fact, some 6,000 people every month are leaving the private health insurance market.
No serious attempt has been made to control the costs I have referred to within the health service. Equally, there has been no serious attempt to change the model of care. We can only make our health service sustainable if we drastically change the model of care by switching the focus away from the most expensive care, which is acute hospital care, to community and primary care. That is what we were promised, but it has not happened. The narrative seems to be that introducing a limited measure of free GP care amounts to a change in the model of care when, in fact, it is only one tiny element of the change that is required. We know that 70% of the workload in the health service relates to chronic illness. Unless we start providing new models of care which deliver early diagnosis, early treatment and good management of chronic illness, we will not see that switch and make those savings. Not only would we make significant savings by changing the model of care to focus on the primary care sector, we would also achieve much better health outcomes. It is a win-win scenario.
Despite its being set out very clearly in the programme for Government that we must move activity into primary and community care, that nettle is not being grasped. In fact, any move to a new model of care has been greatly impeded by ministerial decisions that were taken in this area. There are clinical care programmes that set out best practice in regard to the management of the major chronic illnesses such as diabetes, asthma, chronic obstructive pulmonary disease and so on - the issues that create the greatest burden of care within the health service. It seems, however, that we are not prepared to put in place the types of programmes that would maximise the prevention of chronic illnesses and also ensure best practice in terms of their management, thereby keeping people out of hospitals.
The introduction of free GP care for children aged six and under is indicative of a one-off type of approach. It does not seem to be part of any type of coherent plan. It is most regrettable that the decision was taken to move away from the programme for Government commitment that the first phase of free GP care would encompass people with long-term illnesses. A great deal of work was done in that area and it would have made absolute sense from everybody's point of view to start with the people who are most ill, namely, those with chronic illnesses. Guaranteeing access for people in that category would have represented a real change in the model of care. Part and parcel of the proposal to bring people with chronic illness into the free GP care initiative was to expand the capacity within primary care, including by way of the provision of increased practice supports for GPs. A great deal of the work of chronic disease management is done by practice nurses and other therapists, as referred to by Deputy Catherine Murphy. These professionals are essential to managing chronic illness at community and primary care level.
All those developments were possible. Money was provided to bring people with chronic illness into a free GP care initiative and expand the capacity of primary care by recruiting additional staff. Ideally, of course, we should be talking about fully staffed primary care teams operating from modern primary care centres. That is not happening because there is some blockage within the Department of Health, some objection to that approach to health care. We know the failure to introduce free GP care in 2012 was nothing to do with finances, because money was provided for it.
We know that €30 million was provided for it last year, but it did not happen. We also know that €20 million was provided in 2012 for the additional therapists who were so badly needed, but the Department of Health decided to redirect that essential funding. Instead of being spent on primary care, it was put towards the deficit that had been allowed to balloon within the Department.
When we consider what is being proposed with regard to universal health insurance, it is important to be conscious of where the funding comes from and where it goes within the health service. We know that Exchequer funding of more than €13 billion is provided each year. It is clear from an examination of the health funding structure over the last decade or so that approximately 80% of that funding comes from the Exchequer. Just 10% of it comes from the insurance companies and a further 10% of it comes from out-of-pocket expenses. The moneys that people pay to GPs, which are included in the out-of-pocket expenses category, account for just 3% of total funding. Moneys paid to consultants are also included in that category. It is clear, therefore, that approximately 80% of all health spending is funded by the Exchequer. The Government, in introducing universal health insurance, is proposing to redirect all of that Exchequer funding through the insurance system. That makes no sense whatsoever, to my mind, because it will have two immediate consequences. If we put a vast amount of Exchequer funding into insurance companies, which will have to cream off their profits, it will become dead money straight away. As a result of its failure to control costs in the health service, the Government is likely to oversee a further escalation of health inflation.
The Government is not learning lessons from what has happened in other countries. As we know, the Minister for Health is fond of referring to what happens in Holland. That may have looked promising when visits were made to that country a number of years ago, but we know now that it has not worked out in Holland. The health service was one of the biggest political hot potatoes during the most recent Dutch general election campaign. The Government in Holland failed to provide for the enhancement of primary care. Primary care is still very underdeveloped in Holland. We also know that costs have gone through the roof in Holland. When the new system was being put in place there, the issue of health inflation was not tackled and the model of care was not changed.
Not only are we proposing to put vast amounts of Exchequer funding - taxpayers' money - into the health service in a way that will allow the insurance companies to cream off their part, but we are also essentially handing responsibility for the health service to private interests. That would constitute the privatisation of our health service, in effect. It would be the wrong way to go. A great deal could have been done if the Government had followed the steps set out in the programme for Government and put in place the building blocks to transform our health service, reduce costs and ensure much better health outcomes are achieved. That plan has been bypassed in many ways. I think it is a big mistake to seek to jump to the end point, which is to have an insurance-based system, without first putting in place the essential building blocks.
As I said during the debate on the Health Service Executive (Governance) Bill, I am firmly of the view that nobody in the Government knows what the future holds for the health service. They are going along with proposals or vague notions of the direction of travel. I challenge anybody on the Government benches to tell me what the health service will look like in five or ten years' time. This is a huge leap into the unknown. It is based on vague notions of what we should be doing. There is no clear evidence base for what is being proposed. I am pleased that the Department of Public Expenditure and Reform now seems to be sitting up and paying attention to what is being proposed. It seems to be aware of the significant dangers that are inherent in going headlong into a whole new regime without thinking it through fully, having a clear plan in place or imposing any controls on expenditure. I hope the Department's voice is heard in terms of where we go.